Castells’ monumental text is widely considered to be foundational in the study of globalization. Originally published in 1994, with a second edition in 2000 and updated with a new preface in 2010, The Rise of the Network Society traces the profound global changes initiated by the information technology revolution of the 1970s. The result was that society in all of its manifestations was restructured into the form of the digital network, an interlinking of specific nodes into an ever-expanding, information-based structure with its own global logic. In this new topology, global finance and capitalism itself (and production and consumption) is driven entirely by information; this information propagates instantaneously, simultaneously, and often automatically through computer networks that run the models upon which financial decisions are made. These interwoven networks of finance, goods, labor, media, etc. connect and thus effect every part of the globe, even if power is distributed completely asymmetrically. To disconnect from these global flows is to bear complete isolation; to remain connected is to bear the consequences of one’s relative position within a network hierarchy.

Some of the profound social consequences of this new network topology include the transition from sequential (“clock”) time to a simultaneous “timeless time,” from an industrial economy (focused on economic growth through production and consumption) to an information economy focused on the propagation of information, the elimination of Fordist and Taylorist forms of organization in favor of flexible production and “just in time” fulfillment, the horizontal networking and interlinking of firms (strategic micro-alliances) and people (in the form of an informationalized mass audience), the rise of a virtual reality alongside and interacting with the “real,” and the counterintuitive rise of the importance of the city as the organization of space.

All of this has profound implications for innovation. The network form itself is conducive to innovation in that it has the flexibility to absorb and quickly adapt to radical changes, but also gives form to the new and amorphous: “This networking logic is needed to structure the unstructured while preserving flexibility, since the unstructured is the driving force of innovation in human activity.” (71) Network structures, then, embody as well as address one of the primary paradoxes of innovation systems: that they function by fostering unpredictability, by generating unstructured connections, yet provide structure and systematicity to such unpredictability. Network typology is essential to innovation; when everything is informationalized at a global level, everything is capable of being incorporated into a radical innovation system.

Castells emphasizes that the explosion of productivity and innovation from the 1970s onward was the result of virtuous circles: the application of innovation system outputs to inputs. Computers, for instance, were utilized to design ever more powerful computers, which were used to design ever more powerful computers, etc. Castells’ point is that any innovation system that innovates components of its own network will explode exponentially. While information technology is the best example of this, we should take it as a general feature of innovation systems. For instance, management practices in the 1980s generated a virtuous circle of efficiency according to Castells.

One of the central tensions explored by Castells’ text is that between the networked flows and individual nodes, or “the space of flows” and the “space of places,” or simpler yet, the global and the local. For the most part, the nodes in these overlapping global networks are physical places. Because nodes are nourished relative to their importance within a network, more central nodes will attract more resources; thus cities are growing relative to the rural population, contrary to the predictions of futurologists who believe that virtuality will eliminate the importance of spatial clustering. The most important cites are therefore cities, and the most important cities are those that act as mega-nodes, or important nodes on multiple networks (for instance, New York is importantly situated within networks of finance, the flows of goods, media production, etc.). Castells recasts cities, however, as regional networks, noting the importance of such regions as Silicon Valley and the Hong Hong-Guandong metropolitan region of China.

Castells’ calls such regions, when they focus explicitly on innovation, “mileux of innovation.” Significantly, they function based upon their dual properties of network centrality (virtual positioning within networks of information flows) and synergistic concentration of local (regional) elements of social and industrial inputs. The most effective mileux of innovation relies upon “the spatial concentration of research centers, higher-education institutions, advanced-technology companies, a network of ancillary suppliers of goods and services, and business networks of venture capital to finance start-ups.” (65) Castells’ emphasis, then, is upon the dual nature of innovation: as physical and social synergy between talent, money, the social space of creative thinking and knowledge-generating academic institutions; and as virtual node within global flows of information. Innovation is simultaneously real and virtual, local and global.